Attached files
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EX-10.2 - EXHIBIT 10.2 - CHAMPION INDUSTRIES INC | ex102.htm |
EX-10.3 - EXHIBIT 10.3 - CHAMPION INDUSTRIES INC | ex103.htm |
EX-10.1 - EXHIBIT 10.1 - CHAMPION INDUSTRIES INC | ex101.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF
THE
SECURITIES EXCHANGE ACT OF
1934
Date of
Report (Date of earliest event reported) December
29, 2009
Champion
Industries, Inc.
West
Virginia
0-21084
55-0717455
2450
First Avenue
P. O. Box
2968
Huntington,
West
Virginia 25728
(Address
of Principal Executive
Offices) (Zip Code)
(304)
528-2700
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General
Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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0
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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INFORMATION
TO BE INCLUDED IN THE REPORT
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Section
1 – Registrant’s Business and
Operations
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Item 1.01 Entry Into a Material Definitive
Agreement.
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In a Current Report on
Form 8-K filed March 27, 2009, Champion Industries, Inc. (“Champion”)
advised that on March 25, 2009, Fifth Third Bank, as Administrative Agent
(the “Administrative Agent”) for lenders under Champion’s Credit Agreement
dated September 14, 2007 (the “Credit Agreement”) had sent Champion a
Notice of Default, Notice of Institution of Default Rate and Reservation
of Rights (“Notice of Default”), advising that Champion’s default under
provisions of the Credit Agreement requiring it to maintain certain
financial ratios constituted an Event of Default under the Credit
Agreement.
The Notice of Default further
advised Champion that the Administrative Agent had instituted the default
rate of interest, effective March 25, 2009, with respect to all loans
under the Credit Agreement. The default rate has resulted in Champion
paying an additional 3 percent interest on its outstanding
obligations.
The Notice of Default also
advised that the Administrative Agent had not waived the Event of Default
and reserved all rights and remedies as a result thereof. Those remedies
include, under the Credit Agreement, the right to accelerate and declare
due and immediately payable the principal and accrued interest on all
loans outstanding under the Credit Agreement.
The Notice of Default further
stated that any extension of additional credit under the Credit Agreement
would be made by the lenders in their sole discretion without any
intention to waive any Event of Default.
At November 30, 2009, the
outstanding principal balance of Champion’s obligations under the Credit
Agreement totaled approximately $ 65,357,938.
On December 29, 2009, the
Administrative Agent, Champion and Marshall T. Reynolds entered into a
Forbearance Agreement (the “Forbearance Agreement”) which provides, among
other things, that during a standstill period commencing on December 29,
2009 and ending on March 31, 2010 (unless sooner terminated by default of
Champion under the Forbearance Agreement or the Credit Agreement), the
Required Lenders are willing to temporarily forbear exercising certain
rights and remedies available to them, including acceleration of the
obligations or enforcement of any of the liens provided for in the Credit
Agreement. Champion acknowledged in the Forbearance Agreement that as a
result of the existing defaults, the Lenders are entitled to decline to
provide further credit to Champion, to terminate their loan commitments,
to accelerate the outstanding loans, and to enforce their liens.
The Forbearance Agreement provides
that during the standstill period, so long as Champion has excess
availability equal to or greater than $1,000,000 (and will continue to
have after any request for credit) and meets the conditions of the
Forbearance Agreement, it may continue to request credit under the
revolving credit line.
The Forbearance Agreement imposes
various reporting and disclosure requirements on Champion, requires it to
submit to a third party financial review, maintain certain account levels,
submit to field audits and inspections and reduce outstanding term loans
to $49,632,442.
The reduction in the principal
outstanding obligations of the term loan will be accomplished through the
elimination of various borrowing base reserves established by the
Administrative Agent, the release of $3.0 million in cash collateral that
is being held in escrow pursuant to previous actions by the Administrative
Agent and the $3.0 million in cash proceeds received by Champion from
issuing an unsecured promissory note.
The Forbearance Agreement also
requires Marshall T. Reynolds to lend to Champion $3,000,000 in exchange
for a subordinated unsecured promissory note in like amount, payment of
principal and interest on which is prohibited until payment of all
liabilities under the Credit Agreement. This $3,000,000 will be applied to
prepayment of $3,000,000 of Champion’s loans. This subordinated unsecured
promissory note bearing interest at the Wall Street Journal prime rate
(currently 3.25%) and maturing September 14, 2014, and a debt
subordination agreement, both dated December 29, 2009, have been executed
and delivered, and Mr. Reynolds has advanced $3,000,000 to Champion.
Champion has paid to the
Administrative Agent a nonrefundable forbearance fee of $100,000 upon
closing of the Forbearance Agreement.
The foregoing summary of certain
provisions of the Forbearance Agreement, the subordinated unsecured
promissory note and the debt subordination agreement is qualified in its
entirety by reference to the complete Forbearance Agreement filed as
Exhibit 10.1 hereto, the subordinated unsecured promissory note filed as
Exhibit 10.2 hereto and the debt subordination agreement filed as Exhibit
10.3 hereto, which are incorporated herein by reference.
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Section 2 – Financial Information | |
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant. | |
The description under “Item 1.01 – Entry into a Material Definitive Agreement” of this Current Report on Form 8-K is incorporated herein by reference. |
Section
9 – Financial Statements and Exhibits
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Item
9.01 Financial Statements and
Exhibits
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(d)
Exhibits
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10.1 |
Forbearance
Agreement dated December 29, 2009 among Champion Industries, Inc.,
Marshall Reynolds and Fifth Third Bank, as Lender, L/C Issuer and
Administrative Agent for Lenders.
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10.2 |
Promissory
Note dated December 29, 2009 from Champion Industries, Inc. to Marshall T.
Reynolds.
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10.3 | Debt Subordination Agreement dated December 29, 2009 from Marshall Reynolds to Fifth Third Bank. |
SIGNATURE | |
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Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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CHAMPION
INDUSTRIES, INC.
(Registrant)
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Date: Janurary
4, 2010
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/s/
Todd R. Fry
Todd
R. Fry, Senior Vice President
and
Chief Financial Officer
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EXHIBIT
INDEX
Exhibit
Number
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Exhibit
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10.1
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Forbearance
Agreement dated December 29, 2009 among Champion Industries, Inc.,
Marshall Reynolds and Fifth Third Bank, as Lender, L/C Issuer and
Administrative Agent for Lenders.
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10.2 | Promissory Note dated December 29, 2009 from Champion Industries, Inc. to Marshall T. Reynolds. | |
10.3 | Debt Subordination Agreement dated December 29, 2009 from Marshall Reynolds to Fifth Third Bank. |
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